ANTOINE
AUGUSTIN COURNOT
1801-1877
· Antoine Augustin Cournot was a French
philosopher and mathematician who
also contributed to the development of
economics theory.
· Cournot was the first economist who, with
competent knowledge of both subjects, endeavoured to apply mathematics to the
treatment of economics. His main work in economics is Recherches sur les
principes mathématiques de la théorie des richesses (1838; Researches into the
Mathematical Principles of the Theory of Wealth).
· His primary concern was the analysis of
partial market equilibrium, which he based on the assumption that participants
in the process of exchange are either producers or merchants whose goal is the
maximization of profit. He therefore ignored the concept of utility.
· His most important contributions were his
discussions of :
Ø supply-and-demand
functions and
Ø of
the establishment of equilibrium under conditions of monopoly, duopoly, and
perfect competition;
Ø his
analysis of the shifting of taxes, which he treated as changes in the cost of
production; and
Ø his
discussion of problems of international trade.
· Cournot was the first economist to define and
draw a demand curve to illustrate the relationship between price of and demand
for a given item. He proceeded to show that the profit-maximizing output for a
producer is reached when the marginal cost (the cost of producing one
additional unit) equals the marginal revenue (the revenue realized from selling
one additional unit).
· This work was lost until its rediscovery by Joan Robinson almost a century later.
Moreover, Cournot introduced the idea of
elasticity of demand, though he did not use that phrase.
· Cournot believed that economists must utilize
the tools of mathematics only to establish probable limits and to express less
stable facts in more absolute terms. He further held that the practical uses of
mathematics in economics do not necessarily involve strict numerical precision.
· Today, Cournot's work is recognized in
econometrics. He was also a teacher of political economy and mathematics to
Auguste Walras, who was the father of Léon Walras.
· Cournot and Auguste Walras persuaded Léon
Walras to try political economics. Cournot is also credited to be one of the
sources of inspiration for Léon Walras and his equilibrium theory.
· In the field of economics he is best known
for his work in the field of oligopoly
theory—Cournot competition which is named after him.
SOME OF HIS FAMOUS QUOTES
· Those skilled in mathematical analysis know
that its object is not simply to calculate numbers, but that it is also
employed to find the relations between magnitudes which cannot be expressed in
numbers and between functions whose law is not capable of algebraic expression.
· The employment of mathematical symbols is
perfectly natural when the relations between magnitudes are under discussion;
and even if they are not rigorously necessary, it would hardly be reasonable to
reject them, because they are not equally familiar to all readers and because
they have sometimes been wrongly used, if they are able to facilitate the
exposition of problems, to render it more concise, to open the way to more
extended developments, and to avoid the digressions of vague argumentation.
· Anyone who understands algebraic notation,
reads at a glance in an equation results reached arithmetically only with great
labour and pains.
· In the act of exchange, as in the
transmission of power by machinery, there is friction to be overcome, losses
which must be borne, and limits which cannot be exceeded.
· So far we have studies how, for each
commodity by itself, the law of demand in connection with the conditions of
production of that commodity, determines the price of it and regulates the
incomes of its producers. We considered as given and invariable the prices of
other commodities and the incomes of other producers; but, in reality the economic system is a whole of which the parts are
connected and react on each other. An increase in the incomes of the
producers of commodity A will affect the demand for commodities Band C, etc.,
and the incomes of their producers and, by its reaction will involve a change
in the demand for A. It seems, therefore, as if, for a complete and rigorous
solution of the problems relative to some parts of the economic system, it were
indispensable to take the entire system into consideration. But this would
surpass the powers of mathematical analysis and of our practical methods of
calculation, even if the values of all the constants could be assigned to them
numerically.
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